The city's set to settle a $24-million dispute with the private developers who renovated Lansdowne Park largely because the way their deal is structured, the city would end up holding the bag no matter what it does.

This is in spite of an opinion from the city's lawyers that says that if the city and the Ottawa Sports and Entertainment Group fought it out, the city would probably win.

The $24-million figure is mostly the cost to replace rusty structural steel the builders discovered once they started ripping into the north-side stands of what's now TD Place, though it includes a few smaller surprises and squabbles that aren't surprising in a project as big as Lansdowne — who's on the hook for using higher-end materials in OSEG's new retail area because the city wanted them to match the stuff it used in the park it built next door, that kind of thing.

The Lansdowne partnership's finances are tight. Even in the context of a project worth hundreds of millions, $24 million is real money.

The legal opinion, from outside firm Gowling Lafleur Henderson, is secret. It says that on every front, Gowlings' lawyers think the city would probably win. On the big-ticket steel, OSEG knew that rain leaked into the Civic Centre hockey arena from above — not least because it dripped into Ottawa 67's owner and OSEG partner Jeff Hunt's private box. It had a report in hand suggesting that the steel in the arena roof, which supported the concourse for the football stadium built on top of it, had probably been exposed to a lot of water.

Extra costs at Lansdowne Park have wiped out the possibility that the city will turn a profit on the project.

The Ottawa Sports and Entertainment Group — the city’s partner in the venture, which brought about the return of CFL football to the city and dramatically transformed the Bank Street site — also stands to make less money than initially expected, and suffered an operating loss of $10.9 million in Lansdowne’s start-up year.

The details, released late Tuesday in advance of next week’s finance and economic development committee meeting, are contained in the first-ever annual report on the Lansdowne Partnership Plan. The report provides council with an update on the first year of operations at the park, which was unwrapped in stages following the Ottawa Redblacks opening game on July 18, 2014.

Financial statements for 2014 were provided to the city at a meeting in June, as well as an updated picture of the profit-earning potential of Lansdowne Park.

OSEG operations are expected to generate $109.7 million more in net revenues over 30 years than projected in 2012 thanks to longer term retail leases (at higher rates), higher CFL revenues with broadcast agreements, and higher than expected revenues from naming rights and ticket fees.

However, the business organization has also had to shell out $53.6 million more in unexpected capital expenditures in 2014 and 2015. OSEG’s unanticipated costs included repairing rust in the arena roof, as well as additional work on the retail area; technology costs of $10 million – which are offset by increased revenue – and $20 million more in retail construction costs.

The impact of the revised figures is reduced profit for OSEG over the 30 years of the agreement. OSEG was expected to spend $56.3 million and get paid $69.7 million, for a net return of $13.4 million, in 2012 dollars. But now OSEG is expected to invest $110.5 million and earn $115.4 million, for a net profit of $4.9 million — a reduction of $8.5 million, in 2015 dollars.

The city’s anticipated profits of $22.6 million, meanwhile, will be wiped out in large measure because of the unanticipated costs of repairing the arena’s roof. Depending on how the city decides to settle its dispute with OSEG, it could recoup $6.8 million of the expected profits, according to the report.

The city will guarantee a $23.6-million loan for the Ottawa Sports and Entertainment Group to pay for the corroded steel discovered in TD Place arena, if council agrees to a settlement.

The recommended deal, outlined in a report released Tuesday, would put an end to a beef between the city and OSEG over the damaged steel in the old Civic Centre. The remediation cost was previously pegged at $17 million, but now it's $22.6 million.

Councillors are also learning OSEG wants the city to pay $1 million related to temporary asphalt, concrete pavers and bollards in the public parts of the mixed-use area at Lansdowne Park to make everything match the materials in the urban park.

City staff are recommending the settlement to avoid going through time-consuming commercial arbitration — costing up to $2.5 million in taxpayer money for legal costs if the city loses — with one of its most important business partners.

The city says guaranteeing OSEG's loan would help the sports company land a 3.5% interest rate.

A loan guarantee always comes with the risk the guarantor could be on the hook for the debt if the borrower defaults.

1st financial report on Lansdowne not due until December

It's been more than a year since the first shops and businesses started opening at the redeveloped Lansdowne Park — and now 95 per cent of those retail spaces are filled, according to the Ottawa Sports and Entertainment Group.

But David Chernushenko, the councillor for the area, told CBC News it's still too early to tell whether the $200-million spent to redevelop Lansdowne Park was a success as the first financial report is not due until December.

The City of Ottawa is expected to get the money it invested back over the next 40 years but it could be more than a decade before it starts to come in, Chernushenko said.

"It was a very optimistic [goal] — that everything had to go right. All the retail space had to be rented and those retailers had to make a good profit," he said. "Teams had to do well, you know, seats filled."

Construction almost done

Milestones was one of the first businesses to open at Lansdowne Park last fall. Tom Christie, the restaurant's general manager, said it's been a rocky start to draw customers in.

"It hasn't been everything that we expected it to be, for sure, but at the same time, Ottawa is taking a long time to come around to the area," he said. "We were expecting a lot more foot traffic. Like more of a mall feel."

OSEG said that 1.5 million people have visited Lansdowne so far this year and that traffic is expected to increase as construction wraps up and residents move into the site's 20-storey condo building.

OSEG CEO Bernie Ashe said he hopes the site's office tower will be fully leased by the end of next year.

"I think next year everyone will do better when the office tower is full and the condo towers are full and all the event load continues to grow," he said.

He added that playoff games involving both the Ottawa Redblacks and Ottawa Fury are expected to draw large crowds this fall.

Not everyone smiling in wake of hugely successful CityFolk

Aedan Helmer, Ottawa Sun

It appears CityFolk still has some hurdles to clear if organizers want to return to Lansdowne Park.

While executive director Mark Monahan called it “the perfect spot” for his five-day festival — which attracted an estimated 70,000 fans to the heart of the Glebe — Capital Coun. David Chernushenko says “the jury is still out.”

Chernushenko butted heads with organizers last year when Glebe residents lodged dozens of daily noise complaints after sound from the main stages wafted into the neighbourhood from the old site at Hog’s Back Park.

Before moving to Lansdowne this year, Chernushenko said organizers “originally presented me with a plan that had all outdoor events end at 9 p.m. This morphed into ‘by about 10 p.m.’ I decided to let that go, as long as the noise bylaw was being respected.”

CityFolk organizers turned down the volume and pulled the plug at 10 p.m. sharp, and according to Bylaw and Protection Services, the city fielded only 15 noise complaints — coming from nine Glebe residents — over the five days.

“Some complaints came in well after 10 p.m. (even 11 p.m.), but it is likely this was sound and bass coming from indoor venues,” said Chernushenko.

Lansdowne Park is home to three sports teams, features a farmer’s market, trendy restaurants and a chic shopping district, and plays host to open-air rock concerts, but the newly rebranded and relocated CityFolk will provide the site’s first true test as a “cultural hub.”

“It’s sort of the first test of the site, and I think the City has communicated that they want this to be a cultural hub,” said CityFolk executive director Mark Monahan, who staged his Ottawa Folk Festival at the picturesque Hog’s Back Park for the previous four editions.

“Obviously there’s lots of sports going on (at Lansdowne), but I think this is a great test for the site to see if people will come here for music, and to enjoy the site as that cultural hub,” said Monahan.

“This is really important that we establish the site and the event here.”

After taking over the festival in 2011, Monahan first moved the site from Britannia Park to the more centrally-located Hog’s Back.

But a complete lack of infrastructure at the park forced the festival to move to the decidedly more urban backdrop of Lansdowne.

But not everyone is on board with the move.

The city fielded dozens of noise complaints related to last year’s festival, as the sound drifted several kilometres along the Rideau Canal and into Old Ottawa South and The Glebe, where the bulk of the noise complaints originated.

Glebe resident John Smart was one of those who complained last year, and said he’s “apprehensive” over the idea of having the festival relocate to his back yard.

Businesses in the Glebe and Lansdowne Park want to open their doors on statutory holidays.

The Glebe BIA has put together a application asking city council to give the area special permission to keep businesses open on holidays. Right now only businesses in tourist areas like the ByWard Market are allowed to remain open.

Capital Ward Councillor David Chernushenko told CFRA the idea is to give businesses there the choice to open on holidays.

"On statutory holidays, we've seen large numbers of people out and about and there are certain businesses that cannot open and they end up suffering when they're in competition with those that can," said Chernushenko. "It doesn't mean that everyone has to (open) that as a whole street, you know, like certain malls, you've got to be open at this time, it just means that on certain statutory holidays those businesses would now have that right to be open."

The Glebe BIA said that they will be submitting their completed application next week but they don't expect it to be reviewed by council until the fall.

The argument is that since Lansdowne is a tourist destination, the area should be exempted from the law forcing them to remain closed.

The Glebe BIA is submitting a request to city council next week requesting an exception to an Ontario law that requires retail businesses to close on statutory holidays.

"Let's let the businesses make a choice for what works for them, what works for their customers and their staff," said Andrew Peck, executive director of the BIA.

"We spent quite a bit of time talking about it, we talked to our board, did a survey with our members and went door-to-door to talk to merchants," he said.

Peck said the proposal is not asking for any kind of special designation. Instead, he's appealing to a part of the Retail Business Holidays Act that says exceptions apply to areas "located within two kilometres of a tourist attraction."

The proposal would apply to the Bank Street BIA's official district, including Bank Street and Lansdowne.

Children play in a water park near an art installation at Lansdowne Park Tuesday August 04, 2015. The city has recently put up signs setting out the boundaries where people can and cannot play . (Darren Brown/Ottawa Citizen)

First, people were unclear about where they could park their cars at Lansdowne Park. Now, it’s unclear where their kids can splash around.

Barely a week after a new water plaza opened in the urban park, signs posted by the City of Ottawa last Friday appear to place part of the plaza off-limits for play.

The four signs seem unambiguous. Using directional arrows for emphasis, they admonish visitors to steer clear of the portions of the water plaza near Uplift, artist Jill Anholt’s granite and brushed stainless steel sculpture.

“Jill Anholt artwork,” they read. “Please stay off.”

They also use words and arrows to indicate the area of the water plaza where play is permitted.

Based on the signs’ placement, that would seem to exclude eight of 55 water jets designed to encourage play by children and adults as well as a lower pool where “visitors can sit and cool their feet,” as the city stated in a July 25 press release announcing the new water plaza.

But according to a city spokesperson, the signs have more to do with “way-finding” than prohibiting anything.

“They’re just advising people to not play directly on that central art piece,” said a city media relations officer, who said her statements should be attributed to Léo Morissette, the city’s assistant general manager of parks, recreation and cultural services.

“They’re not demarking any kind of forbidden area where people aren’t allowed to go,” she said. “That area of the water plaza is still open to anyone who cares to go and enjoy it.”